##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, DC 20549




---

FORM 10-Q

(Mark One)



|  |                                                                                         
|- | ----------------------------------------------------------------------------------------
|X | Quarterly report pursuant to Section 13 or 15(d) of the
	Securities Exchange Act of 1934

For the quarterly period ended March 31, 2001

or



|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|( ) | Transition report pursuant to Section 13 or 15(d) of the
	Securities Exchange Act of 1934

For the transition period from
                to

Commission file number 000-26313

NETWORK PLUS CORP.

(Exact Name of Registrant as Specified in Its
Charter)


|                                                                                         |  |                                               
|---------------------------------------------------------------------------------------- |  | ----------------------------------------------
|Delaware
	(State or Other Jurisdiction of
	Incorporation or Organization)                |  | 04-3430576
	(IRS Employer
	Identification No.)
|                                                                                        
|41 Pacella Park Drive
	Randolph, Massachusetts
	(Address of Principal Executive Officer) |  | 02368
	(Zip Code)                             

(781) 473-2000

(Registrants Telephone Number, Including
Area Code)


234 Copeland Street, Quincy, Massachusetts 02169

(Former Name, Former Address and Formal Fiscal
Year,


if Changed Since Last Report)


Indicate by check mark whether the registrant: 
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days.  (X) 
YES  ( )  NO

The number of shares of the registrants Common Stock
($0.01 par value) outstanding on May 1, 2001 was 64,158,542.









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TABLE OF CONTENTS



|                                    |                                                                                               |                                                                |  |  |  |  |  | 
|----------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------- |  |  |  |  |  | 
|PART I -- FINANCIAL INFORMATION    
|                                    | Item 1. Financial Statements                                                                 
|                                    |                                                                                               | NETWORK PLUS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS      
|                                    |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
|                                    |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
|                                    |                                                                                               | NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                    | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                    | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II -- OTHER INFORMATION       
|                                    | Item 2. Changes in Securities and Use of Proceeds                                            
|                                    | Item 6. Exhibits and Reports on Form 8-K                                                     
|AMEND. RESTATED BYLAWS             
|AMEND. TO 1998 STOCK INCENTIVE PLAN



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##### Table of Contents



FORM 10-Q

THREE MONTHS ENDED MARCH 31, 2001


INDEX

|              |  |                       |    |                                                                                                        |  |        |    | 
|------------- |  | --------------------- | -- | ------------------------------------------------------------------------------------------------------ |  | ------ | -- | 
|              |  |                       |    |                                                                                                        |  | Page  
|              |  |                       |    |                                                                                                        |  | Number
|              |  |                       |    |                                                                                                        |  |       
|PART  I      |  | FINANCIAL INFORMATION |    |                                                                                                        |  |       
|              |  | Item 1.               |    | Financial Statements                                                                                   |  |        |    | 
|              |  |                       |    | NETWORK PLUS CORP.                                                                                     |  |        |    | 
|             
|             
|             
|             
|              |  |                       |    | Unaudited Condensed Consolidated Balance Sheet March 31,
	2001 and December 31, 2000.                  |  |        | 2  | 
|             
|             
|             
|             
|              |  |                       |    | Unaudited Condensed Consolidated Statements of Operations Three
	Months Ended March 31, 2001 and 2000. |  |        | 3  | 
|             
|             
|             
|             
|              |  |                       |    | Unaudited Condensed Consolidated Statements of Cash Flows Three
	Months Ended March 31, 2001 and 2000. |  |        | 4  | 
|             
|             
|             
|             
|              |  |                       |    | Notes to Unaudited Condensed Consolidated Financial Statements                                         |  |        | 5  | 
|             
|             
|             
|             
|              |  | Item 2.               |    | Managements Discussion and Analysis of Financial Condition
	and Results of Operations                 |  |        | 9  | 
|             
|             
|             
|             
|              |  | Item 3.               |    | Quantitative and Qualitative Disclosures About Market Risk                                             |  |        | 14 | 
|             
|             
|             
|             
|PART  II     |  | OTHER INFORMATION     |    |                                                                                                        |  |       
|             
|             
|             
|             
|              |  | Item 2.               |    | Changes in Securities and Use of Proceeds                                                              |  |        | 14 | 
|             
|             
|             
|             
|              |  | Item 6.               |    | Exhibits and Reports on Form 8-K                                                                       |  |        | 15 | 
|             
|             
|             
|             
|SIGNATURES    |  |                       | 16 |                                                                                                       
|             
|             
|             
|             
|EXHIBIT INDEX |  |                       | 17 |                                                                                                       

1



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1.  Financial Statements




NETWORK PLUS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)


(Unaudited)


|                                                                                                                                                                                                                                                               |                                                                                                 |                                           |          |              |         |  |          |        |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ----------------------------------------- | -------- | ------------ | ------- |  | -------- | ------ | ------- | 
|                                                                                                                                                                                                                                                               |                                                                                                 | March 31,                                 |          | December 31,
|                                                                                                                                                                                                                                                               |                                                                                                 | 2001                                      |          | 2000        
|                                                                                                                                                                                                                                                               |                                                                                                 |                                           |          |             
|ASSETS                                                                                                                                                                                                                                                        
|Current Assets                                                                                                                                                                                                                                                 |                                                                                                 |                                           |          |              |         |  |          |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                               | Cash and cash equivalents                                                                       |                                           | $        | 951          |         |  | $        | 12,474 |        
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                               | Accounts receivable, net of allowance for doubtful accounts of
	$4,174 and $3,294, respectively |                                           |          | 48,825       |         |  |          | 55,922 |        
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                               | Prepaid expenses                                                                                |                                           |          | 3,682        |         |  |          | 1,185  |        
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                               | Other current assets                                                                            |                                           |          | 18,095       |         |  |          | 14,517 |        
|                                                                                                                                                                                                                                                               |                                                                                                 |                                           |          |              |         |  |          |       
|                                                                                                                                                                                                                                                               |                                                                                                 | Total current assets                      |          |              | 71,553  |  |          |        | 84,098  | 
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Property and equipment, net                                                                                                                                                                                                                                    |                                                                                                 |                                           | 288,836  |              |         |  | 269,073  |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Other assets, net                                                                                                                                                                                                                                              |                                                                                                 |                                           | 42,824   |              |         |  | 51,488   |       
|                                                                                                                                                                                                                                                               |                                                                                                 |                                           |          |              |         |  |          |       
|                                                                                                                                                                                                                                                               |                                                                                                 | TOTAL ASSETS                              |          | $            | 403,213 |  |          | $      | 404,659 | 
|                                                                                                                                                                                                                                                               |                                                                                                 |                                           |          |              |         |  |          |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK
	AND STOCKHOLDERS EQUITY                                                                                                                                                                                 
|Current Liabilities                                                                                                                                                                                                                                            |                                                                                                 |                                           |          |              |         |  |          |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                               | Accounts payable                                                                                |                                           | $        | 45,635       |         |  | $        | 72,231 |        
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                               | Accrued liabilities                                                                             |                                           |          | 15,172       |         |  |          | 14,979 |        
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                               | Current portion of capital lease obligations                                                    |                                           |          | 16,257       |         |  |          | 17,288 |        
|                                                                                                                                                                                                                                                               |                                                                                                 |                                           |          |              |         |  |          |       
|                                                                                                                                                                                                                                                               |                                                                                                 | Total current liabilities                 |          |              | 77,064  |  |          |        | 104,498 | 
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Revolving credit facility                                                                                                                                                                                                                                      |                                                                                                 |                                           | 55,000   |              |         |  |         |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Long-term capital lease obligations                                                                                                                                                                                                                            |                                                                                                 |                                           | 27,375   |              |         |  | 28,351   |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Long-term note payable to stockholder                                                                                                                                                                                                                          |                                                                                                 |                                           | 1,875    |              |         |  | 1,875    |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Other long-term liabilities                                                                                                                                                                                                                                    |                                                                                                 |                                           | 3,460    |              |         |  | 2,815    |       
|Commitments                                                                                                                                                                                                                                                    |                                                                                                 |                                           |          |              |         |  |          |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Preferred stock, $0.01 par value, 1,000 shares authorized:
	Redeemable Series A Cumulative Convertible Preferred Stock,
	500 shares authorized: 250 shares issued and outstanding,
	(aggregate liquidation preference of $127,788 and $127,566,
	respectively) |                                                                                                 |                                           | 120,174  |              |         |  | 120,065  |       
|Stockholders Equity                                                                                                                                                                                                                                           |                                                                                                 |                                           |          |              |         |  |          |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Common stock, $0.01 par value, 150,000 shares authorized, 63,429
	and 61,810 shares, issued and outstanding, respectively                                                                                                                                      |                                                                                                 |                                           | 634      |              |         |  | 618      |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Additional paid-in capital                                                                                                                                                                                                                                     |                                                                                                 |                                           | 273,331  |              |         |  | 271,399  |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Stock subscription receivable                                                                                                                                                                                                                                  |                                                                                                 |                                           | (176     | )            |         |  | (176     | )     
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Warrants                                                                                                                                                                                                                                                       |                                                                                                 |                                           | 15,074   |              |         |  | 15,634   |       
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|Accumulated deficit                                                                                                                                                                                                                                            |                                                                                                 |                                           | (170,598 | )            |         |  | (140,420 | )     
|                                                                                                                                                                                                                                                               |                                                                                                 |                                           |          |              |         |  |          |       
|                                                                                                                                                                                                                                                               |                                                                                                 | Total stockholders equity                |          |              | 118,265 |  |          |        | 147,055 | 
|                                                                                                                                                                                                                                                               |                                                                                                 |                                           |          |              |         |  |          |       
|                                                                                                                                                                                                                                                               |                                                                                                 | TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE |          |              |         |  |          |        |         | 
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                               |                                                                                                 | PREFERRED STOCK AND STOCKHOLDERS EQUITY  |          | $            | 403,213 |  |          | $      | 404,659 | 
|                                                                                                                                                                                                                                                               |                                                                                                 |                                           |          |              |         |  |          |       

The accompanying notes are an integral part of the unaudited



2



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##### Table of Contents



NETWORK PLUS CORP.






CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share data)


(Unaudited)


|                                                                           |                                                      |                 |         |         |   |   |         |         |  
|-------------------------------------------------------------------------- | ---------------------------------------------------- | --------------- | ------- | ------- | - | - | ------- | ------- | -
|                                                                           |                                                      |                
|                                                                           |                                                      | Three Months   
|                                                                           |                                                      | Ended March 31,
|                                                                           |                                                      |                
|                                                                           |                                                      | 2001            |         | 2000   
|                                                                           |                                                      |                 |         |        
|Revenues                                                                   |                                                      | $               | 72,119  |         |   | $ | 50,259  |        
|Operating expenses                                                         |                                                      |                 |         |         |   |   |         |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Costs of services                                    |                 |         | 53,245  |   |   |         | 40,854  |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Selling, general and administrative expenses         |                 |         | 28,347  |   |   |         | 20,053  |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Depreciation and amortization                        |                 |         | 14,868  |   |   |         | 4,748   |  
|                                                                           |                                                      |                 |         |         |   |   |         |        
|                                                                           |                                                      |                 | 96,460  |         |   |   | 65,655  |        
|                                                                           |                                                      |                 |         |         |   |   |         |        
|Operating loss                                                             |                                                      |                 | (24,341 | )       |   |   | (15,396 | )      
|Other income (expense)                                                     |                                                      |                 |         |         |   |   |         |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Interest income                                      |                 |         | 186     |   |   |         | 408     |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Interest expense                                     |                 |         | (6,016  | ) |   |         | (1,449  | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Other income (expense)                               |                 |         | (7      | ) |   |         | 28      |  
|                                                                           |                                                      |                 |         |         |   |   |         |        
|                                                                           |                                                      |                 | (5,837  | )       |   |   | (1,013  | )      
|                                                                           |                                                      |                 |         |         |   |   |         |        
|Net loss                                                                   |                                                      |                 | (30,178 | )       |   |   | (16,409 | )      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Preferred stock dividends and accretion of offering expenses and
	discount |                                                      |                 | (2,898  | )       |   |   |        |        
|                                                                           |                                                      |                 |         |         |   |   |         |        
|Net loss applicable to common stockholders                                 |                                                      | $               | (33,076 | )       |   | $ | (16,409 | )      
|                                                                           |                                                      |                 |         |         |   |   |         |        
|Net loss per share applicable to common stockholders 
	basic and diluted  |                                                      | $               | (0.52   | )       |   | $ | (0.30   | )      
|                                                                           |                                                      |                 |         |         |   |   |         |        
|Weighted average shares outstanding  basic and diluted                    |                                                      |                 | 63,270  |         |   |   | 55,075  |        
|                                                                           |                                                      |                 |         |         |   |   |         |        
|Comprehensive loss                                                         |                                                      |                 |         |         |   |   |         |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Net loss                                             |                 | $       | (30,178 | ) |   | $       | (16,409 | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Unrealized loss on investment securities, net of tax |                 |         |        |   |   |         | (130    | )
|                                                                           |                                                      |                 |         |         |   |   |         |        
|Comprehensive loss                                                         |                                                      | $               | (30,178 | )       |   | $ | (16,539 | )      
|                                                                           |                                                      |                 |         |         |   |   |         |        

The accompanying notes are an integral part of the unaudited



3



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##### Table of Contents



NETWORK PLUS CORP.






CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


(Unaudited)


|                                                 |                                                                                 |                                                 |                                           |         |         |         |         |         |         |         |  
|------------------------------------------------ | ------------------------------------------------------------------------------- | ----------------------------------------------- | ----------------------------------------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | -
|                                                 |                                                                                 |                                                
|                                                 |                                                                                 | Three Months                                   
|                                                 |                                                                                 | Ended March 31,                                
|                                                 |                                                                                 |                                                
|                                                 |                                                                                 | 2001                                            |                                           | 2000   
|                                                 |                                                                                 |                                                 |                                           |        
|Cash flows from operating activities:            |                                                                                 |                                                 |                                           |         |         |         |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Net loss                                                                        |                                                 | $                                         | (30,178 | )       |         | $       | (16,409 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Adjustments to reconcile net income to net cash used for
	operating activities: |                                                 |                                           |         |         |         |         |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                 | Depreciation and amortization                   |                                           |         | 14,868  |         |         |         | 4,748   |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                 | Amortization of debt issuance costs             |                                           |         | 3,215   |         |         |         |        |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                 | Interest payable on note payable to stockholder |                                           |         | 51      |         |         |         | 46      |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Changes in assets and liabilities:                                              |                                                 |                                           |         |         |         |         |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                 | Accounts receivable                             |                                           |         | 7,097   |         |         |         | (8,841  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                 | Prepaid expenses                                |                                           |         | (2,497  | )       |         |         | (1,933  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                 | Other current assets                            |                                           |         | (3,578  | )       |         |         | (492    | )      
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                 | Other assets                                    |                                           |         | 5,307   |         |         |         | (148    | )      
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                 | Accounts payable                                |                                           |         | (12,096 | )       |         |         | (18,282 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                 | Accrued liabilities                             |                                           |         | 193     |         |         |         | 1,322   |        
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                                 | Other liabilities                               |                                           |         | 594     |         |         |         | 302     |        
|                                                 |                                                                                 |                                                 |                                           |         |         |         |         |        
|                                                 |                                                                                 |                                                 | Net cash used for operating activities    |         |         | (17,024 | )       |         |         | (39,687 | )
|                                                
|                                                
|                                                
|                                                
|Cash flows from investing activities:            |                                                                                 |                                                 |                                           |         |         |         |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Capital expenditures                                                            |                                                 |                                           | (33,269 | )       |         |         | (38,533 | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of fiber capacity                                                      |                                                 |                                           | (14,500 | )       |         |         |        |        
|                                                 |                                                                                 |                                                 |                                           |         |         |         |         |        
|                                                 |                                                                                 |                                                 | Net cash used for investing activities    |         |         | (47,769 | )       |         |         | (38,533 | )
|                                                
|                                                
|                                                
|                                                
|Cash flows from financing activities:            |                                                                                 |                                                 |                                           |         |         |         |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Net proceeds from revolving credit facility                                     |                                                 |                                           | 55,000  |         |         |         | 40,000  |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Principal payments on capital lease obligations                                 |                                                 |                                           | (3,227  | )       |         |         | (3,323  | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Net proceeds from issuance of common stock                                      |                                                 |                                           | 1,497   |         |         |         | 3,797   |        
|                                                 |                                                                                 |                                                 |                                           |         |         |         |         |        
|                                                 |                                                                                 |                                                 | Net cash provided by financing activities |         |         | 53,270  |         |         |         | 40,474  |  
|                                                 |                                                                                 |                                                 |                                           |         |         |         |         |        
|Net decrease in cash                             |                                                                                 |                                                 | (11,523                                   | )       |         |         | (37,746 | )      
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at beginning of period |                                                                                 |                                                 | 12,474                                    |         |         |         | 43,031  |        
|                                                 |                                                                                 |                                                 |                                           |         |         |         |         |        
|Cash and cash equivalents at end of period       |                                                                                 | $                                               | 951                                       |         |         | $       | 5,285   |        
|                                                 |                                                                                 |                                                 |                                           |         |         |         |         |        
|Noncash investing and financing activities:      |                                                                                 |                                                 |                                           |         |         |         |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Fixed assets acquired under capital leases                                      |                                                 | $                                         | 1,220   |         |         | $       | 1,995   |        
|                                                 |                                                                                 |                                                 |                                           |         |         |         |         |        
|                                                 | Dividends recorded on preferred stock to be paid in common stock                |                                                 | $                                         | 2,788   |         |         | $       |        |        
|                                                 |                                                                                 |                                                 |                                           |         |         |         |         |        

The accompanying notes are an integral part of the unaudited



4



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NETWORK PLUS CORP.






NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS


(In thousands, except per share data)


1.  Basis of Presentation

The accompanying condensed consolidated financial statements of
the Company are unaudited and have been prepared in accordance
with accounting principles generally accepted in the United
States of America for interim financial information and with the
instructions to Form 10-Q and Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. In
the opinion of management, all normal, recurring adjustments
considered necessary for a fair presentation have been included.
The balance sheet data as of December 31, 2000 has been
derived from the Companys audited consolidated financial
statements.

These financial statements should be read in conjunction with
the audited consolidated financial statements and footnotes
thereto included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2000.
Interim results of operations are not necessarily indicative of
the results to be expected for the full year or any other
interim periods.

Certain amounts in the financial statements for the prior year
have been reclassified to conform with the current year
presentation. Such reclassifications had no effect on previously
reported results of operations.

2.  Related Party Transactions

On January 31, 2001, the Company entered into an agreement
to extend the lease of office space located in Quincy,
Massachusetts. This property is leased from a trust, the
beneficiaries of which are the principal stockholders of the
Company. The lease was extended through February 28, 2013
and gives the Company the option to extend the lease for two
additional five-year periods. The monthly rental and condominium
fee payments under this agreement are $99.0 per month,
increasing to $106.0 and $113.0 per month in March 2005 and
2009, respectively.

3.  Property and Equipment

|                                               |  |                                           |  |           |         |              |  |   |         |  
|---------------------------------------------- |  | ----------------------------------------- |  | --------- | ------- | ------------ |  | - | ------- | -
|                                               |  |                                           |  | March 31, |         | December 31,
|                                               |  | Estimate Useful Life                      |  | 2001      |         | 2000        
|                                               |  |                                           |  |           |         |             
|Network infrastructure and equipment           |  | 5 and 10 years                            |  | $         | 179,896 |              |  | $ | 162,665 |  
|                                              
|                                              
|                                              
|                                              
|Computer equipment                             |  | 3-5 years                                 |  |           | 15,822  |              |  |   | 14,665  |  
|                                              
|                                              
|                                              
|                                              
|Office furniture and equipment                 |  | 7 years                                   |  |           | 3,991   |              |  |   | 3,783   |  
|                                              
|                                              
|                                              
|                                              
|Software                                       |  | 3 years                                   |  |           | 16,878  |              |  |   | 15,496  |  
|                                              
|                                              
|                                              
|                                              
|Motor vehicles                                 |  | 5 years                                   |  |           | 1,103   |              |  |   | 947     |  
|                                              
|                                              
|                                              
|                                              
|Leasehold improvements                         |  | Shorter of term of lease or life of asset |  |           | 36,104  |              |  |   | 28,684  |  
|                                              
|                                              
|                                              
|                                              
|Construction in progress                       |  |                                           |  |           | 88,003  |              |  |   | 81,068  |  
|                                               |  |                                           |  |           |         |              |  |   |         |  
|                                               |  |                                           |  |           | 341,797 |              |  |   | 307,308 |  
|                                              
|                                              
|                                              
|                                              
|Less accumulated depreciation and amortization |  |                                           |  |           | (52,961 | )            |  |   | (38,235 | )
|                                               |  |                                           |  |           |         |              |  |   |         |  
|                                               |  |                                           |  | $         | 288,836 |              |  | $ | 269,073 |  
|                                               |  |                                           |  |           |         |              |  |   |         |  

Depreciation and amortization expense related to property and
equipment for the three months ended March 31, 2001 and
2000 amounted to $14,725 and $4,072, respectively.

5



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NETWORK PLUS CORP.


NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS  (Continued)


(In thousands, except per share data)


4.  Other Assets

Other assets consist of the following:

|                         |  |           |        |              |  |   |        | 
|------------------------ |  | --------- | ------ | ------------ |  | - | ------ | 
|                         |  | March 31, |        | December 31,
|                         |  | 2001      |        | 2000        
|                         |  |           |        |             
|Prepaid fiber capacity   |  | $         | 37,073 |              |  | $ | 39,707 | 
|                        
|                        
|                        
|                        
|Debt issuance costs, net |  |           | 3,263  |              |  |   | 9,164  | 
|                        
|                        
|                        
|                        
|Rent deposits            |  |           | 1,227  |              |  |   | 1,218  | 
|                        
|                        
|                        
|                        
|Intangible assets, net   |  |           | 928    |              |  |   | 1,071  | 
|                        
|                        
|                        
|                        
|Other                    |  |           | 333    |              |  |   | 328    | 
|                         |  |           |        |              |  |   |        | 
|                         |  | $         | 42,824 |              |  | $ | 51,488 | 
|                         |  |           |        |              |  |   |        | 

Prepaid fiber capacity relates to payments made for long-haul
transport capacity. These fees were paid by the Company in
exchange for a 20 year indefeasible right to use
pre-determined fiber routes connecting the northeastern and
southeastern regional networks. Based on the terms of the
agreement, these pre-determined routes may be changed at the
option of the Company. The current portion of prepaid fiber
capacity included in other current assets at March 31, 2001
was $2,002. These fees are being amortized to operations over
the 20 year service period, of which $632 has been
amortized during the three months ended March 31, 2001.

Amortization expense related to intangible assets was $142 and
$677 for the three months ended March 31, 2001 and 2000,
respectively.

5.  Revolving Credit Agreements

On September 27, 2000, the Company entered into a Senior
Secured Credit Facility as amended, (the Credit
Facility), with various lenders allowing for maximum
borrowings of $225.0 million. Borrowings at March 31, 2001
totaled $55.0 million. Subsequent to March 31, 2001 through
May 1, 2001, the Company has borrowed an additional $22.0
million under the Credit Facility. The Credit Facility matures
on June 30, 2002, when all unpaid borrowings become
immediately due. Under this facility, the Company is entitled to
borrowings not to exceed the sum of (i) 80% of eligible
accounts receivable, (ii) 70% of eligible unbilled
accounts, and (iii) 50% of eligible net property and
equipment, as defined by the agreement. Based on the terms of
this agreement, the Company is subject to various covenants,
including the maintenance of certain financial and operating
ratios. The Company is required to maintain pre-established
levels of revenue, earnings before interest, taxes,
depreciation, and amortization (EBITDA), days sales
outstanding (DSO) and access lines, as defined by the
agreement. Additionally, the Company is restricted as to the
level of capital assets it may acquire within any given quarter
and is restricted from paying cash dividends. Failure to comply
with the restriction and covenant obligations under this Credit
Facility could result in a default. The lenders have a right,
under events of default, and an event deemed by the lenders to
be an adverse change in the Companys business to terminate
future borrowings under the Credit Facility and require
accelerated repayment of outstanding borrowings.

On February 9, 2001, the Credit Facility was amended.
Included in this amendment was a provision to exclude the loss
of the NorthPoint Communications equity investment recognized in
2000 from the calculation of EBITDA for purposes of maintaining
minimum EBITDA covenants as defined by the agreement. If this
amendment was not made, the Company would have not been in
compliance with the financial covenants under this facility.

In connection with the Credit Facility, the Company issued
warrants entitling the holders to purchase in aggregate 3,854
shares of the Companys common stock at an exercise price
of $7.01 per share. Upon entering

6



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NETWORK PLUS CORP.


NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS  (Continued)


(In thousands, except per share data)


the Credit Facility, 72.73% of the warrants were exercisable,
with 13.64% exercisable on a pro rata basis with each amount
drawn by the Company on the first $100 of loans under the Credit
Facility, and the remaining 13.63% exercisable at any time on or
after the date the amount drawn by the Company under the Credit
Facility exceeds $100. These warrants were valued using a
Black-Scholes valuation model assuming an interest rate of
5.83%, volatility of 93%, no dividends, and an estimated life of
3 years. The $15,043 value assigned to these warrants along
with $6,701 of other issuance costs is included in debt issuance
costs and is being accreted to interest expense on a
straight-line basis through the maturity date. At March 31,
2001, $13,004 and $3,263 of unamortized debt issuance costs
remains in other current and long-term assets, respectively.

Along with this agreement, the Company has also entered into a
pledge and security agreement, pledging substantially all of the
Companys assets to the lenders as collateral.

6.  Net Loss Per Share

The computations of basic and diluted earnings per common share
are based upon the weighted average number of common shares
outstanding and potentially dilutive securities. Potentially
dilutive securities for the Company include warrants, stock
options and redeemable convertible preferred stock.

The following table sets forth the computation of basic and
diluted loss per share:

|                                                                          |  |                    |         |      |  |   |         |  
|------------------------------------------------------------------------- |  | ------------------ | ------- | ---- |  | - | ------- | -
|                                                                          |  |                   
|                                                                          |  | Three Months Ended
|                                                                          |  | March 31,         
|                                                                          |  |                   
|                                                                          |  | 2001               |         | 2000
|                                                                          |  |                    |         |     
|Net loss applicable to common stockholders                                |  | $                  | (33,076 | )    |  | $ | (16,409 | )
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Shares used in net loss per share  basic and diluted                     |  |                    | 63,270  |      |  |   | 55,075  |  
|                                                                          |  |                    |         |      |  |   |         |  
|Net loss per share applicable to common stockholders 
	basic and diluted |  | $                  | (0.52   | )    |  | $ | (0.30   | )
|                                                                          |  |                    |         |      |  |   |         |  

Warrants for the purchase of 3,862 and 1,366 shares and stock
options for the purchase of 6,900 and 4,374 shares of common
stock were not included in the computation of net loss per share
for the three months ended March 31, 2001 and 2000,
respectively, because inclusion of these shares would have an
anti-dilutive effect. In addition, shares of redeemable
convertible preferred stock which are convertible into an
aggregate of 3,672 shares of common stock were not included in
the computation of net loss per share for the three months ended
March 31, 2001 because inclusion of these shares would have
an anti-dilutive effect on net loss per share.

7



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##### Table of Contents



NETWORK PLUS CORP.


NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS  (Continued)


(In thousands, except per share data)


7.  Segment Information

The Company has two reportable segments which management
operates as distinct sales organizations. These two segments are
segregated by type of customer base to whom services are
provided. The two customer base types are: retail
telecommunications and data services, and wholesale
telecommunications. The Company measures and evaluates its two
reportable segments based on revenues and costs of services. The
retail telecommunications and data services segment provides
local and long distance services, including voice and data
transport and enhanced and customer calling features. This
segment focuses on selling these services to end user customers,
such as businesses and residences. The wholesale
telecommunications segments provides transport and termination
services. This segment focuses on selling these services to
large communication carriers, who utilize the Companys
excess capacity to provide telephone voice services to their
customers.

|                        |                                             |                    |        |        |  |   |        |        | 
|----------------------- | ------------------------------------------- | ------------------ | ------ | ------ |  | - | ------ | ------ | 
|                        |                                             |                   
|                        |                                             | Three Months Ended
|                        |                                             | March 31,         
|                        |                                             |                   
|                        |                                             | 2001               |        | 2000  
|                        |                                             |                    |        |       
|Revenue:                |                                             |                    |        |        |  |   |        |       
|                       
|                       
|                       
|                       
|                        | Retail telecommunications and data services |                    | $      | 55,601 |  |   | $      | 28,614 | 
|                       
|                       
|                       
|                       
|                        | Wholesale telecommunications                |                    |        | 16,518 |  |   |        | 21,645 | 
|                        |                                             |                    |        |        |  |   |        |       
|Total revenues          |                                             | $                  | 72,119 |        |  | $ | 50,259 |       
|                        |                                             |                    |        |        |  |   |        |       
|Costs of services:      |                                             |                    |        |        |  |   |        |       
|                       
|                       
|                       
|                       
|                        | Retail telecommunications and data services |                    | $      | 34,560 |  |   | $      | 20,403 | 
|                       
|                       
|                       
|                       
|                        | Wholesale telecommunications                |                    |        | 18,685 |  |   |        | 20,451 | 
|                        |                                             |                    |        |        |  |   |        |       
|Total costs of services |                                             | $                  | 53,245 |        |  | $ | 40,854 |       
|                        |                                             |                    |        |        |  |   |        |       

8



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##### Table of Contents






Item 2.  Managements Discussion and
Analysis of Financial Condition and Results of Operations

Introduction

The following discussion should be read in conjunction with the
unaudited condensed consolidated financial statements and
related notes of Network Plus Corp. (the Company,
we or us) included herein as well as the
consolidated financial statements and notes and
Managements Discussion and Analysis of Financial Condition
and Results of Operations included in the Companys Annual
Report on Form 10-K for the fiscal year ended
December 31, 2000. In addition to historical information,
the following discussion and other information in this report
contains forward-looking information that involves risks and
uncertainties. For this purpose, any statement that is not a
statement of historical fact is forward-looking information,
including without limitation statements concerning the
Companys future capital requirements, future financial
results, sufficiency of available capital and availability of
additional financing. Without limiting the generality of the
foregoing, words such as believes,
anticipates, expects and similar
expressions identify forward-looking statements. The
Companys actual results could differ materially from those
anticipated by such forward-looking information due to
competitive factors, risks associated with the Companys
expansion plans and other factors discussed in the
Companys Form 10-K for the year ended December 31,
2000 and below under Certain Factors That May Affect
Future Operating Results.

Overview

Network Plus, founded in 1990, is a network-based communications
provider offering a comprehensive suite of telecommunications,
broadband data and Internet Data Center hosting services. The
Companys services include local and long distance voice,
high-speed data, Internet and web server and managed server
hosting. The Company currently utilizes digital subscriber line,
or DSL, technology to provide high-speed data and Internet
access and provides local and long distance services using
traditional switched access, ATM and other technologies. The
Company currently serves primarily small and medium-sized
business customers in the northeastern and southeastern regions
of the United States.

Results of Operations

The following table sets forth for the periods indicated certain
financial data as a percentage of revenues:

|                                    |  |                    |       |      |  |  |       |   
|----------------------------------- |  | ------------------ | ----- | ---- |  |  | ----- | --
|                                    |  |                   
|                                    |  | Three Months Ended
|                                    |  | March 31,         
|                                    |  |                   
|                                    |  | 2001               |       | 2000
|                                    |  |                    |       |     
|Revenues                            |  |                    | 100.0 | %    |  |  | 100.0 | % 
|                                   
|                                   
|                                   
|                                   
|Costs of services                   |  |                    | 73.8  |      |  |  | 81.3  |   
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |  |                    | 39.3  |      |  |  | 39.9  |   
|                                   
|                                   
|                                   
|                                   
|Depreciation and amortization       |  |                    | 20.6  |      |  |  | 9.4   |   
|                                   
|                                   
|                                   
|                                   
|Operating loss                      |  |                    | (33.8 | )    |  |  | (30.6 | ) 
|                                   
|                                   
|                                   
|                                   
|Other income (expense)              |  |                    | (8.1  | )    |  |  | (2.0  | ) 
|                                   
|                                   
|                                   
|                                   
|Net loss                            |  |                    | (41.8 | )%   |  |  | (32.6 | )%

Three Months Ended March 31, 2001
Compared to Three Months Ended March 31, 2000

Revenues. Revenues increased $21.9 million, or 43%, to
$72.1 million for the three months ended March 31, 2001
from $50.3 million for the same period in the prior year.
Approximately one half of the increase was due to the $15.5
million increase in revenues from the sale of local services,
which totaled $22.7 million for the three months ended
March 31, 2001. Revenues from the sale of local services
represented 32% of total revenues in the three-month period
ended March 31, 2001 compared to 14% of total revenues in
the same period in the prior year. Local lines in service at the
period ended March 31, 2001 increased 139% to 215,000 from
90,000 lines at March 31, 2000. Revenues generated from
data services, which included co-location and Internet Data
Center hosting services, DSL, Internet services and leasing of
fiber-optic capacity, totaled $17.6 million for the period ended
March 31, 2001, an increase of $15.6 million over the same
period in

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##### Table of Contents





Retail long distance revenues decreased $4.1 million to $15.3
million during the period ended March 31, 2001 representing
21% of total revenues compared to 39% of total revenues in the
same period in the prior year despite an increase in minutes
during the period ended March 31, 2001. In addition,
revenues generated from international wholesale traffic, which
results from utilizing excess capacity on our long distance
switches during off-peak hours, decreased $5.1 million, to $16.5
million from $21.6 million for the same period in the prior
year. International wholesale traffic as a percent of total
revenues declined to 23% of total revenues in the period ended
March 31, 2001, decreasing from 43% of total revenues
during the same period in the prior year. We operate in a
competitive market for long distance service, which has
experienced price erosion of the average rate per minute from
the prior year. We expect this price trend to continue in the
future.

Costs of Services. Costs of services increased $12.4
million, or 30%, to $53.2 million for the three months ended
March 31, 2001 from $40.9 million for the same period in
the prior year. The increase in total costs of services is due
primarily to the increase in total revenues. As a percent of
revenues, total cost of services decreased to 74% for the three
months ended March 31, 2001 from 81% for the same period in
the prior year. The cost of services as a percent of revenues
was positively impacted by a shift of services to local and
data, which have lower costs of services as a percent of
revenue, but were offset by higher costs of services as a
percent of revenue from international and long distance traffic.
As the deployment of our local network continues and co-location
facilities become operational, the costs associated with these
facilities, including rent, power and access charges, are
reflected in costs of services. These facility costs are
generally fixed and will result in fluctuations in margin until
this capacity is fully utilized.

Selling, General and Administrative. Selling, general and
administrative expenses increased $8.3 million, or 41%, to $28.3
million for the period ended March 31, 2001 from $20.1
million for the same period in the prior year. As a percentage
of revenues, selling, general and administrative expenses
decreased to 39% for the period ended March 31, 2001 from
40% for the same period in the prior year. We employed 988
people at March 31, 2001, compared with 706 at
March 31, 2000, resulting in an increase in payroll and
related expenses of 50% for the period. The sales organization
increased by 154 people as compared to the same period in the
prior year, and we added 67 people to support the build-out of
our local and data network. Costs associated with the
co-location facilities including rent, power, access and leased
line charges for facilities which are not fully deployed are
included in selling, general and administrative expenses. We
expect these charges to decrease as the number of co-location
facilities become operational, at which time the related costs
are reclassified to costs of services. We expect selling,
general and administrative expenses to increase as a result of
our growth in revenues and the expansion of our infrastructure
to support future growth. However, we believe these expenses as
a percent of revenues will continue to decline as our rate of
network and infrastructure expansion reduces relative to our
projected revenue growth.

Depreciation and Amortization. Depreciation and
amortization increased $10.1 million, or 213%, to $14.9 million
during the three months ended March 31, 2001 from $4.7 million
for the same period in the prior year. The increase is primarily
due to local network facilities, data services equipment and
other telecommunications equipment to support our network
expansion which became operational during the last fiscal year.
In particular, the southeastern local switching and co-location
equipment and northeastern data centers were placed into service
and began depreciating during the second half of 2000. We expect
depreciation and amortization expense to increase as we bring
additional local network facilities on-line and as we make
additional investments in our network and operational
infrastructure including the mid-Atlantic region.

Interest. Interest expense net of interest income
increased to $5.8 million for the three months ended
March 31, 2001 from $1.0 million for the same period in the
prior year. The increase in net interest expense is due to the
amortization of issuance costs, of $3.2 million, associated with
the $225.0 million Credit Facility and borrowings during the
period ended March 31, 2001 under this facility to fund the
continued build-out of the local and data network and operating
activities.

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Net Loss and Net Loss Applicable to Common Stockholders.
The contribution from increased revenues was offset by an
increase in selling, general and administrative expenses,
depreciation and amortization expense, and interest expense,
which resulted in a net loss of $30.2 million during the three
months ended March 31, 2001, compared to $16.4 million for
the same period in the prior year.

The effect of the net loss combined with the preferred stock
dividends and accretion to redemption value of $2.9 million
during the three months ended March 31, 2001 resulted in
net losses applicable to common stockholders of $33.1 million
for the same period compared to $16.4 million for the same
period in the prior year. Dividends payable on the convertible
preferred stock sold by us in our April 12, 2000 offering
are required to be paid in shares of common stock under the
terms of the Credit Facility. For accounting purposes, the value
of the dividend is increased for the discounted amount of the
shares issued. The discount amount is calculated at 95% of the
average closing price of the stock over the five days prior to
the day the shares are issued. These dividends and our
anticipated increase in net losses will result in net losses
applicable to common stockholders in the future.

EBITDA. EBITDA was negative $9.5 million for the three
month period ended March 31, 2001 compared to negative
$10.6 million for the same period in 2000. The $9.5 million
contribution from increased revenues was partially offset by the
$8.3 million increase in selling, general and administrative
expenses due to the infrastructure required to support our
growth.

Liquidity and Capital Resources

Total assets were $403.2 million at March 31, 2001 compared
to $404.7 million at December 31, 2000. Cash and cash
equivalents were approximately $1.0 million at March 31,
2001 compared to $12.5 million at December 31, 2000. Net
cash used for operating activities was $17.0 million during the
three months ended March 31, 2001. Capital expenditures
were $34.5 million for the three months ended March 31,
2001. In addition, we paid $14.5 million for fiber capacity
acquired in December 2000, during the three months ended
March 31, 2001.

On September 27, 2000 we entered into a Senior Secured
Credit Facility (the Credit Facility) agreement with
Goldman Sachs Credit Partners, Fleet Securities, DLJ Bridge
Finance and Fleet National Bank. This facility provides up to
$225.0 million in total principal based on eligible receivables
and eligible net property as defined by the agreement.
Borrowings under this Credit Facility are expected to be used
for the purchase and acquisition of telecommunications assets
and to finance operating losses and working capital. All
borrowings under this facility are collateralized by
substantially all of the Companys assets. There were $55.0
million and $77.0 million outstanding under this facility at
March 31, 2001 and May 1, 2001, respectively.

The Credit Facility agreement imposes operating and financial
restrictions on us. These restrictions affect, and in many cases
limit, among other things, our ability to:



| |   |                                                               
| | - | --------------------------------------------------------------
| |  | pay dividends or make distributions to our common stockholders
|
| |  | incur additional indebtedness                                 
|
| |  | make investments or other restricted payments                 
|
| |  | sell or dispose of assets.                                    

Our strategic initiatives include the deployment of additional
local switches, the co-location of network equipment, the
offering of new local and data services, the expansion of our
sales force and other personnel, and significant investment in
our information technology systems. These initiatives will
require a substantial amount of capital for the installation of
network switches and related equipment, fiber, personnel
additions and funding of operating losses and working capital.

We currently anticipate that our available cash and Credit
Facility will be sufficient to meet our anticipated working
capital and capital expenditure requirements through fiscal
2001. In the event our operations are not profitable or do not
generate sufficient cash, or if we fail to comply with the
restrictions and obligations under the Credit Facility, which
could result in a default that could limit the availability of

11



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##### Table of Contents





Our estimate of future capital requirements is a forward-looking
statement within the meaning of the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. The actual
amount and timing of our future capital requirements may differ
substantially from our estimate due to factors such as the costs
of building the mid-Atlantic region, capital requirements and
growth projections, cost overruns, changes in demand for our
services, regulatory, technological or competitive developments,
and the other factors identified under Certain Factors
That May Affect Future Operating Results.

Recently Issued Accounting Standard

In June 1998, the Financial Accounting Standards Board (the
FASB) issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities effective
January 1, 2001. SFAS 133 establishes accounting and
reporting standards required that every derivative instrument,
including certain derivative instruments embedded in other
contracts, be recorded in the balance sheet as either an asset
or liability measured at its fair value. The statement also
requires that changes in the derivatives fair value be
recognized in earnings unless specific hedge accounting criteria
are met. In June 2000, the FASB issued SFAS 138, which
amended certain provisions of SFAS 133. This pronouncement
did not have a material impact on our financial position or
results of operations.

Certain Factors That May Affect Future Operating Results

We had operating losses in the first quarter of 2001 and each of
the last five years and negative cash flow from operating
activities in the first quarter of 2001 and 2000. We expect to
incur expenditures in connection with the continued acquisition,
development and expansion of our network infrastructure, product
offerings, information technology systems and employee base. As
a result, we expect to incur future operating losses and
negative cash flow. If our revenues do not increase
significantly or the increase in our expenses is greater than
expected, we may not achieve or sustain profitability or
generate positive cash flow in the future.

Our ability to meet our projected growth will require
substantial cash resources. The anticipated expansion of our
network infrastructure after 2001, including the addition of
co-locations, switches, Internet Data Centers and other network
elements, and our anticipated funding of negative cash flow from
operating activities, may require additional capital. The
maturity of our Credit Facility in mid-2002 may require
additional capital. Furthermore, if we acquire other businesses,
we may require additional financing. Our ability to satisfy
future capital needs will depend upon the continued availability
of our credit and equipment lease facilities and cash from
operations. If for any reason the Credit Facility becomes
unavailable or our ability to draw on this facility is limited,
including as a result of a breach by us of the financial or
other covenants contained in the Credit Facility, we may be
required to seek alternative financing or modify our business
plan. Additional financing may place significant limits on our
financial and operating flexibility or may not be available to
us. Failure to obtain future financing when needed or on
acceptable terms could cause us to delay or abandon our
development and expansion plans and could materially adversely
affect our growth and ability to compete.

As a result of our limited operating history as a provider of
telecommunications, broadband data, and Internet Data Center
hosting services and the evolving nature of the
telecommunications and Internet industries, we may not be able
to accurately forecast our revenues. We do not believe that
period-to-period comparisons of our operating results are
necessarily meaningful, or that investors should rely upon them
as indicators of future performance. In one or more future
quarters, our results of operations may fall below the
expectations of securities analysts and investors, which would
likely materially adversely affect the trading price of our
stock.

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The markets for Internet access, broadband data, including DSL,
web and managed server hosting and competitive local service are
in the early stages of development. We have limited experience
providing these additional services and can give no assurance
that our services will receive market acceptance or that prices
and demand for these services will be sufficient to achieve or
sustain profitable operations.

Our future operating performance will depend upon our ability to
implement and manage our growth effectively. Our rapid growth to
date has placed, and in the future will continue to place, a
significant strain on our administrative, operational,
managerial and financial resources. Failure to attract and
retain additional qualified sales and other personnel, including
management personnel who can manage our growth effectively, or
failure to successfully train or integrate such personnel, could
materially adversely affect our future operating performance. To
manage our growth effectively, we will also have to continue to
improve and upgrade operational, financial and accounting
information systems, controls and infrastructure, as well as
control costs and maintain regulatory compliance. Failure of our
systems to perform as expected could have a material adverse
affect on us.

Prices for telecommunications services have fallen historically,
a trend we expect will continue. Accordingly, we cannot predict
to what extent we may need to reduce our prices to remain
competitive or whether we will be able to sustain future pricing
levels as our competitors introduce competing services or
similar services at lower prices.

We have a significant amount of indebtedness, and our
indebtedness will increase as we draw on our Credit Facility.
Our ability to repay our indebtedness will depend on our future
operating performance, which will be affected by prevailing
economic conditions and financial, business and other factors.
Some of these factors are beyond our control. If we are unable
to service our indebtedness or other obligations, we will be
forced to examine alternative strategies. These strategies may
include reducing or delaying capital expenditures, restructuring
or refinancing indebtedness or seeking additional debt or equity
financing. We can give no assurance that any of these strategies
could be effected on satisfactory terms.

Our Credit Facility imposes operating and financial restrictions
on us. Failure to comply with any of these restrictions,
including pre-established levels of revenue, earnings before
interest, taxes, depreciation, and amortization, or EBITDA, days
sales outstanding and access lines, could limit the availability
of borrowings or result in a default under our Credit Facility.
For the year ended December 31, 2000, the lenders agreed to
amend a financial covenant to grant us additional operating
flexibility. We can give no assurance that we will obtain a
waiver or amendment for any future noncompliance.

We rely on other companies to supply certain key components of
our network infrastructure, including telecommunications
services, DSL and Internet services, network capacity and
switching and networking equipment, which, in the quantities and
quality demanded by us, are available only from sole or limited
sources. We are also dependent upon incumbent local exchange
carriers and other carriers to provide telecommunications
services and facilities to us and our customers and upon third
parties for other services. Many of these companies are or may
become our competitors. There can be no assurance that we will
be able to obtain such services or facilities on the scale and
within the time frames required by us at an affordable cost, or
at all.

We may acquire other businesses that we believe will complement
our existing business. These acquisitions will likely involve
risks such as the difficulty of assimilating the acquired
operations and personnel, the diversion of resources and the
risks of entering markets in which we have little experience.
These transactions may be required for us to remain competitive.
We can give no assurance that we will be able to obtain required
financing for such transactions or that such transactions will
occur.

Our industry is highly competitive, and we expect competition to
intensify in the future. We do not have a significant market
share in any of our markets. Most of our actual and potential
competitors have substantially greater financial, technical,
marketing and other resources, including brand or corporate name
recognition than we do.

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The telecommunications industry has been, and is likely to
continue to be, characterized by rapid technological change,
frequent new service introductions and evolving industry
standards. Increases or changes in technological capabilities
could harm our competitive position.

Telecommunications services are subject to significant
regulation at the Federal, state, local and international
levels. Delays in receiving required regulatory approvals or the
enactment of new legislation or regulations could have a
material adverse effect on us. In addition, future governmental
actions could alter competitive conditions in the markets in
which we are operating or intend to operate in ways that are
materially adverse to us.

Interruptions in service, capacity limitations or security
breaches on our network or the networks on which we depend could
have a material adverse effect on us.

See also the Risk Factors contained in our Annual Report on
Form 10-K for the year ended December 31, 2000.




Item 3.  Quantitative and Qualitative
Disclosures About Market Risk

The Company is exposed to market risk from changes in the
interest rate related to our Credit Facility, which is based
upon either the Prime Rate or LIBOR Rate, each of which is a
variable interest rate. Assuming an average borrowing level of
$55.0 million (which amount approximated the amount borrowed
under all revolving credit facilities as of March 31, 2001)
each 1 percentage point increase in the applicable interest
rate would result in $550.0 thousand of additional annual
interest charges. The Company does not currently use interest
rate derivative instruments to manage exposure to interest rate
changes.




PART II  OTHER INFORMATION




Item 2.  Changes in Securities and Use of
Proceeds

Amended and Restated By-laws

On April 17, 2001, the Company adopted Amended and Restated
By-laws, which are filed herewith as Exhibit 3.2. These
Amended and Restated By-laws reflect recent changes in Delaware
law expressly authorizing certain electronic communications in
connection with stockholder meetings and include the other
changes set forth therein.

The Amended and Restated By-laws require that the Company be
given advance notice of stockholder nominations for election to
the Board of Directors and of other matters that stockholders
wish to present for action at an annual meeting of stockholders
(other than matters included in the Companys proxy
statement in accordance with Rule 14a-8 under the
Securities and Exchange Act of 1934, as amended (the
Exchange Act)). The required notice must be made in
writing, include the information required by the Amended and
Restated By-laws, be delivered or mailed by first class United
States mail, postage prepaid, to the Secretary of the Company at
its principal offices and be received not less than 60 days
nor more than 90 days prior to the meeting; provided,
however, that if less than 70 days notice or prior public
disclosure of the date of the meeting is given to stockholders,
such nomination or other proposal shall have been mailed or
delivered to the Secretary not later than the close of business
on the 10th day following the date on which the notice of the
meeting was mailed or such public disclosure made, whichever
occurs first. While the Company has not yet set the date of the
2002 Annual Meeting, assuming it will be held on May 7,
2002 (the same day as the 2001 Annual Meeting), notice of a
stockholder proposal or director nomination would need to be
made no earlier than February 6, 2002 and no later than
March 8, 2002. Any such stockholder proposal must also
comply with the other applicable provisions of the
Companys Certificate of Incorporation and Amended and
Restate By-laws and the Exchange Act. No stockholder proposal is
required to be considered unless it is presented in accordance
with the foregoing requirements.

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Recent Sales of Unregistered Securities

During the first quarter of 2001, the Company issued 179,443
shares of Common Stock upon the exercise of warrants that were
initially (i) issued and sold in the companys
September 1998 sale of Units consisting of shares of 13.5%
Series A Cumulative Preferred Stock and warrants,
(ii) issued to certain lenders in May 1999 in
connection with an amendment to the Companys prior credit
facility or (iii) issued to certain lenders in
September 2000 in connection with the Companys Credit
Facility. All of such warrant exercises were effected through
cashless exercises that did not involve the payment
of additional consideration to the Company. The shares of Common
Stock issued pursuant to such warrant exercises were offered and
sold in reliance upon exemptions set forth in Sections 3(b)
and 4(2) of the Securities Act of 1933, as amended, or
Regulation D promulgated thereunder, relating to sale by an
issuer not involving a public offering. No underwriters or
placement agents were involved in the issuance of Common Stock
pursuant to any exercise of the foregoing warrants.




Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

The exhibits listed on the Exhibit Index are filed herewith.

(b)  Reports on Form 8-K

The Company did not file any reports on Form 8-K during the
three months ended March 31, 2001.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in
Randolph, Massachusetts, on May 1, 2001.



| |                   
| | ------------------
| | NETWORK PLUS CORP.



| |     |                      
| | --- | ---------------------
| | By: | /s/ ROBERT J. COBUZZI

| | 
| | 
| | 

| |  |                  
| |  | -----------------
| |  | Robert J. Cobuzzi

| |                                             
| | --------------------------------------------
| | Executive Vice President,                   
| | Chief Financial Officer and Treasurer       
| | (Principal Financial and Accounting Officer)

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EXHIBIT INDEX

|        |       |       |  |                                                     
|------- | ----- | ----- |  | ----------------------------------------------------
|Exhibit |       |      
|Number  |       | Title
|        |       |      
|        | 3.2   |       |  | Amended and Restated By-laws of the Company         
|       
|       
|       
|       
|        | 10.1A |       |  | Amendment to the Companys 1998 Stock Incentive Plan

17